What Is Socially Responsible Investing (SRI)?

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If you have an interest in “going green” and saving the planet, you’ll be pleased to know that you can use SRI to invest your monies in socially responsible corporations and industries.

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How you manage and invest your dollars is not only important to you and your family, it can also have an impact on the environment, people and even society.

What is Socially Responsible Investing?

Investing your money in an ethical, socially conscious way means that you’re placing it in investment vehicles that not only earn you money, but also do something positive for others and/or the environment.

Ethical or socially responsible investing usually involves placing your dollars with companies that use environmentally friendly practices, employ diversity when hiring, and manufacture products that are healthy or “good” for consumers.

Investing in products or goods that are sustainable would also fall into this category of investing.

What Types of Investments Would One Avoid to be Socially Responsible?

There are several areas you would typically avoid, such as any industries related to gambling, alcohol, weaponry, and tobacco, because these industries are seen as unhealthy, harmful to people and even dangerous.

How is it Possible to Invest Only in SRIs?

This question is tricky because many investments are in some way affiliated with at least one of the areas listed earlier as not socially conscious. Especially when you invest in mutual funds, it can difficult to determine if all the companies represented in the mutual fund fall into the SRI category.

The best way to invest consciously in such corporations is to do some homework online to ensure the companies or mutual funds you wish to invest in engage in ethical practices before consulting with stockbrokers and financial planners.

Also, through a process called, “screening,” investors and financiers evaluate companies based on how they perform socially and ethically using specific criteria to measure those elements. Corporations who receive less than satisfactory social responsibility performance scores may not gain investment dollars from ethical investors.

Where and How to Find SRI Companies/Investments

Recently, several socially responsible mutual funds have become available. Major investment companies such as Calvert and Van Eck Global offer socially responsible investments to their customers. Some investment companies totally focus on offering environmentally friendly/SRI investment products. Portfolio 21 Investments, SRI Wealth Management Group, Parnassus Investments, and Appleseed Fund are a few of those companies. In addition, various websites specialize in getting the word out about SRIs. Social Funds website is one such example.

Factors to Bear in Mind When Considering Investments in SRIs

1. Your personal values.

Keep in mind your personal values about sustainability, human rights, employee treatment, and societal good as you make decisions about your investments. Carefully review company brochures, statements and annual reports to get a feel for their investment environment before investing your dollars.

2. Possibilities for growth.

Remember that your main reason to invest is to make your money multiply. Even though your values steer you toward SRIs, ensure that you are making the best investment possible for your money.

3. Higher fees.

Because it costs more to perform tasks ethically and responsibly, don’t be surprised if you pay higher fees to invest in SRI companies and mutual funds.

There is much to know about making socially responsible investments. When you’re about to make any investment, do your homework, consider your personal values, think about the possibilities for growth, and determine your investment costs. With this strategy, your investments work both for your family and the good of the world we live in.

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